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Overview

The drop in oil prices has weighed across base metals and gold. Renewed fears about the health of the global financial system and the outlook for economic growth has prompted many hedge funds and short-term momentum players to cut back on their commodities exposures. Gold prices rose to a four-month high of US$ 987.75 an ounce, however they lost ground then due to the retreat for oil. After reaching a high for the year of US$ 3,460 a ton in early March, lead prices fell 55.5 percent to a low of US$ 1,540 a ton in early July. Lead prices have rallied 36 percent since then and sentiment appears to have become more favourable. Lead rose to US$ 2,265 a ton lately helped by hedge funds closing out short positions. Nickel slipped below US$ 20,000 a ton on weak demand. In the US, the Commerce Department said sales of new homes fell 0.6 percent to a seasonally adjusted annual rate of 530,000 in June while according to the National Association of Realtors, existing home sales tumbled by 2.6 percent from an annual rate of 4.99m units in May to 4.86m units in June. The European Central Bank lifted on July 3rd its main interest rate by a quarter percentage point to 4.25 percent, as a sign to bring inflation back under control. Eurozone inflation hit 4 percent in June on an annual basis, twice as high as the ECB’s inflation target, according to Eurostat. In the Eurozone, industrial production fell by 1.9 percent in May, according to Eurostat. This is the biggest monthly drop for almost 16 years. Production of durable consumer goods dropped by 3.3 percent in May. China’s economy grew 10.1 percent in the second quarter, down from 10.6 percent in the first quarter. The growth rate slowed because of weaker export markets and restrictions on lending. In Japan, exports in June shrank 1.7 percent year on year for the first time in nearly five years.